Election's likely impact on health-care issues

SAN FRANCISCO (MarketWatch) -- Taxpayers and consumers may see changes in health policy affecting Medicare, stem cell research and the power of the Food and Drug Administration if Democrats gain control of one or both chambers of Congress in November.

Should Democrats pick up the 15 seats needed for a House majority in the midterm elections on Nov. 7, the governing approach to relatively new programs such as the Medicare drug benefit and health savings accounts, both created by a 2003 law, likely will shift, public policy experts said. Paired with high-deductible health plans, health savings accounts are tax-favored vehicles for investing money to pay for out-of-pocket medical costs.

First on Democrats' agenda would be to give Medicare the ability to bargain with drug companies for better prices, much like the Veterans' Administration does, said Robert Hayes, president of the Medicare Rights Center, an advocacy group in Washington.

"I have no doubt if the balance tips in either house there will be a vote and an overwhelming vote in favor of allowing Medicare to negotiate lower prices with drug companies," Hayes said. "The reason the Congressional leadership has not permitted a vote for the last three years on this is because it's very difficult to explain a rationale for prohibiting negotiation."

The president ultimately may veto the bill, but Hayes said he expects Republican lawmakers to lend it bipartisan support. "It's kind of political dynamite in terms of who you're representing -- Pfizer or Mrs. Jones?"

Michael Cannon, director of health policy studies for the Cato Institute, a libertarian think tank that promotes free-market policies in Washington, said Democrats should refer to the change they're seeking not as promoting negotiation but as instituting price controls.

Republicans likely would oppose such a bill for several reasons, Cannon said. "They would have to admit that what they had put in place wasn't working. They would face a lot of pressure from pharmaceutical companies who backed that program and that approach and won't want that changed."

Still, voting to allow Medicare that power would likely bring down costs, he said, which Congress could then use to pay for another area Democrats are concerned about -- the gap in beneficiaries' Part D coverage known as the doughnut hole. Under the standard benefit, enrollees must pay for their entire drug spending between $2,250 and $3,600.

Many Democrats also are dissatisfied with privatization and may want to create a Medicare-administered option for enrollees who want to retain traditional Medicare and add a drug benefit instead of signing up for a comprehensive private plan, Hayes said.

"Our sense is a lot of consumers would be comforted by trying to pick that Medicare option," he said. "It probably could be enacted and I can't imagine it would be something President Bush would bother vetoing. That would be a material change because I think over time most of the folks would probably vote to go into that plan."

Still, he acknowledged that how legislation is put together can make or break its chances of succeeding. "The packaging of a reform could spell doom for any reform."

Ideological differences

In recent years, the federal government's role in health care has been overshadowed in some cases by greater reform activity at the state and municipal levels.

State laws are becoming more important as some try to mandate minimum benefit levels, such as so-called Wal-Mart bills that cap the percentage of a large employer's work force that's eligible to receive public health care, and others that toy with universal coverage, such as Massachusetts' push to require uninsured individuals to buy a health plan or face financial penalties.

Even so, the federal government's dominant ideological stance on issues such as the role of the free market and religion sets the tone in many ways, said Arthur Levin, director of the Center for Medical Consumers, a nonprofit consumer advocacy group in New York.

"What we have is an administration supported by a Congress that thinks the public sector can do no good and that privatization is a way to get these programs back on track," Levin said. "A change in the makeup of Congress would slow that down."

Stem cell research, for example, may advance further if Democrats tip the balance, he said.

"One would hope there might be some effort to rein in the introduction of theology into science, that a reconfigured Congress might put its foot down on this issue and say these are scientific decisions and we can't let religious politics intrude," Levin said. "That's one issue where a Congress that's less beholden to the conservative right probably could do better."

Expansion of health savings accounts may take a back seat under new control, said Bill Vaughan, senior policy analyst for Consumers Union. "If the Democrats take one chamber, there will be a lot more resistance to HSAs because the feeling is they break up the insurance pool and tend to benefit upper-income people."

Levin agreed. "I would think there might be a slowdown of that and a reexamination of how to proceed."

Republicans likely would push back if Democrats tried to gut any of the existing HSA laws or regulations, Cannon said.

"There would be a lot of resistance because employers like them and they're gaining new adherence among consumers," he said. "The real danger is if you get two houses of Congress that are hostile to health savings accounts or a new administration that's hostile to [them] because they can rewrite legislation in ways that would make HSAs very unappealing for employers and consumers."

What's more, Democrats are likely to act on the Institute of Medicine's recent recommendation that Congress give the Food and Drug Administration more authority to regulate drug safety both before and after drugs come to market, Cannon said.

"I think they're going to be more sympathetic to imposing new regulations on the FDA than Republicans are for ideological and political reasons," he said.

Acting now and later

Regardless of the election's outcome, both parties will have to confront at least one of Medicare's growing budget problems almost immediately -- the fact that doctors' payments are going to be cut, Vaughan said.

"The way the doctor payment formula works in Medicare is doctors will be facing a 5.1% cut in January," he said. "Whoever's in charge will want to deal with it because you're going to get a bunch of doctors saying 'I don't want to treat Medicare patients.'"

The likely shifts brought on by a Democratic majority in either chamber may be nuanced rather than dramatic, Levin said.

"I don't think if we had a Democratic Congress that we'd get universal health insurance tomorrow, but there would be subtle differences in policy that from my perspective would be good but not enough," he said. "I don't think we'll resolve the health-care crisis until it's such a crisis that people demand a solution."

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